Universal Service Reform Act of 2009 Discussion Draft of 11-06-09

8/14/2019 Universal Service Reform Act of 2009 Discussion Draft of 11-06-09

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111TH CONGRESS1ST SESSION H. R.

llTo reform the universal service provisions of the Communications Act of

1934, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

Mr. BOUCHER (for himself and Mr. TERRY) introduced the following bill;which was referred to the Committee onlllllllllllllll

A BILL

To reform the universal service provisions of the

Communications Act of 1934, and for other purposes.

Be it enacted by the Senate and House of Representa-1

tives of the United States of America in Congress assembled,2

SECTION 1. SHORT TITLE.3

This Act may be cited as the Universal Service Re-4

form Act of 2009.5

SEC. 2. DEFINITIONS.6

(a) IN GENERAL.Section 3(a) of the Communica-7

tions Act of 1934 (47 U.S.C. 153(a)) is amended8

(1) by adding the following new paragraphs:9

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(53) COMMUNICATIONS SERVICE PROVIDER.1

The term communications service provider means2

any entity that3

(A) contributes to or receives universal4

service support for the most recent calendar5

quarter ending before the date of enactment of6

the Universal Service Reform Act of 2009;7

(B) uses telephone numbers or Internet8

protocol addresses, or their functional equiva-9

lents or successors, to offer a service or a capa-10

bility11

(i) that provides or enables real-time12

2-way voice communications; and13

(ii) in which the voice component is14

the primary function; or15

(C) offers directly to the public, or to16

such classes of users as to be effectively avail-17

able directly to the public, a physical trans-18

mission facility, whether circuit-switched, pack-19

et-switched, a leased line, or using radio fre-20

quency transmissions (regardless of the form),21

protocol, or statutory classification of the serv-22

ice that allows an end user to obtain access23

from a particular end user location to a net-24

work that permits the end user to engage in25



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electronic communications (including tele-1

communications) with the public.2

(54) HIGH-SPEED BROADBAND SERVICE.3

(A) DEFINITION.The term high-speed4

broadband service means a 2-way network that5

uses Internet protocol (and the associated capa-6

bilities and functionalities, services, and appli-7

cations provided over an Internet protocol plat-8

form or for which an Internet protocol capa-9

bility is an integral component) and services, fa-10

cilities, equipment, or applications that enable11

an end-user to receive communications in Inter-12

net protocol format, regardless of whether the13

communications are voice, data, video, or any14

other form, at a download receiving rate of 1.515

megabits per second or greater.16

(B) COMMISSION SPEED ADJUSTMENT17

REQUIREMENTS.Beginning with the sixth18

year after the date of enactment of the Uni-19

versal Service Reform Act of 2009, the Com-20

mission shall review the speed requirement in21

subparagraph (A) biennially and shall make the22

necessary adjustments to increase the minimum23

download receiving rate as advancement and de-24

ployment of new technology allows communica-25



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tions service providers to provide broadband1

service at such increased minimum download2

receiving rate to end users in an economically3

efficient manner.4

(C) INTERNET PROTOCOL.The term5

Internet protocol means the Transmission6

Control Protocol/Internet Protocol or any pred-7

ecessor or successor protocols to such protocol.8

(55) MOBILE WIRELESS COMMUNICATIONS9

SERVICE PROVIDER.The term mobile wireless10

communications service provider means a provider11

of commercial mobile service (as defined in section12

332(d) of the Communications Act of 1934 (4713

U.S.C. 332(d))), except that such term shall only14

apply to a provider of such service as it relates to15

2-way communications.; and16

(2) by reordering paragraphs (1) through (52)17

of such section and the additional paragraphs added18

by paragraph (1) of this section in alphabetical19

order based on the headings of such paragraphs and20

renumbering such paragraphs as so reordered.21

(b) RULE OF CONSTRUCTION.Terms used in this22

Act shall have the meanings set forth in the Communica-23

tions Act of 1934 (47 U.S.C. 151 et seq.) unless otherwise24

specified.25



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TITLE IUNIVERSAL SERVICE1

REFORM2

SEC. 101. UNIVERSAL SERVICE REFORM PROCEDURES AND3

PRINCIPLES.4

Section 254 of the Communications Act of 1934 (475

U.S.C. 254) is amended by amending subsections (a)6

through (c) to read as follows:7

(a) PROCEDURES TO REFORM UNIVERSAL SERV-8

ICE.9

(1) FEDERAL-STATE JOINT BOARD ON UNI-10

VERSAL SERVICE.Within 1 month after the date of11

enactment of the Universal Service Reform Act of12

2009, the Commission shall institute and refer to13

the Federal-State Joint Board under section 410(c)14

a proceeding to recommend changes to any of its15

regulations in order to implement section 214(e) of16

this title and this section (as amended by the Uni-17

versal Service Reform Act of 2009), including the18

definition of the services that are supported by Fed-19

eral universal service support mechanisms and a spe-20

cific timetable for completion of such recommenda-21

tions. In addition to the members of the Joint Board22

required under section 410(c), 1 member of such23

Joint Board shall be a State-appointed utility con-24

sumer advocate nominated by a national organiza-25



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tion of State utility consumer advocates. The Joint1

Board shall, after notice and opportunity for public2

comment, make its recommendations to the Commis-3

sion within 9 months after the date of enactment of4

the Universal Service Reform Act of 2009.5

(2) COMMISSION ACTION.The Commission6

shall initiate a single proceeding to consider the rec-7

ommendations from the Joint Board required by8

paragraph (1) and shall complete such proceeding9

within 18 months after the date of enactment of the10

Universal Service Reform Act of 2009. The rules es-11

tablished by such proceeding shall include a defini-12

tion of the services that are supported by Federal13

universal service support mechanisms and a specific14

timetable for implementation.15

(b) UNIVERSAL SERVICE PRINCIPLES.The Joint16

Board and the Commission shall base policies for the pres-17

ervation and advancement of universal service on the fol-18

lowing principles:19

(1) QUALITY AND RATES.Quality services20

should be available at just, reasonable, and afford-21

able rates.22

(2) ACCESS TO ADVANCED SERVICES.Access23

to advanced telecommunications and information24



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services should be provided in all regions of the Na-1

tion.2

(3) ACCESS IN RURAL, INSULAR, OR HIGH3

COST AREAS.Consumers in all regions of the Na-4

tion, including low-income consumers and those in5

rural, insular, or high cost areas, should have access6

to the services the Commission determines to be uni-7

versal services in accordance with subsection (c), in-8

cluding interexchange services and advanced tele-9

communications and information services, that are10

reasonably comparable to those services provided in11

urban areas and that are available at rates that are12

reasonably comparable to rates charged for similar13

services in urban areas.14

(4) COMPARABLE TREATMENT OF COMMU-15

NICATIONS SERVICE PROVIDERS.16

(A) EQUITABLE AND NONDISCRIM-17

INATORY CONTRIBUTIONS.All communications18

service providers should make equitable and19

nondiscriminatory contributions to the preserva-20

tion and advancement of universal service.21

(B) COMPETITIVE NEUTRALITY.Federal22

and State mechanisms to preserve and advance23

universal service should be competitively neutral24

such that those mechanisms neither unfairly ad-25



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vantage nor disadvantage one communications1

service provider over another and neither un-2

fairly favor nor disfavor one technology over an-3

other.4

(5) EXPLICIT, SPECIFIC, AND PREDICTABLE5

SUPPORT MECHANISMS.There should be explicit,6

specific, predictable, and sufficient Federal and7

State mechanisms to preserve and advance universal8

service.9

(6) ACCESS TO ADVANCED TELECOMMUNI-10

CATIONS SERVICES FOR SCHOOLS, HEALTH CARE,11

AND LIBRARIES.Elementary and secondary schools12

and classrooms, health care providers, and libraries13

should have access to advanced telecommunications14

services as described in subsection (h).15

(7) ADDITIONAL PRINCIPLES.Such other16

principles as the Joint Board and the Commission17

determine are necessary and appropriate for the pro-18

tection of the public interest, convenience, and ne-19

cessity and are consistent with this Act.20

(c) DEFINITION.21

(1) IN GENERAL.Universal service includes22

the services defined on the day before the date of en-23

actment of the Universal Service Reform Act of24

2009 as universal services, as modified by the Com-25



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mission as necessary to implement the provisions of1

such Act, high-speed broadband service, and an2

evolving level of telecommunications and information3

services that the Commission shall establish periodi-4

cally under this section, taking into account ad-5

vances in telecommunications and information tech-6

nologies and services. The Joint Board in recom-7

mending, and the Commission in establishing, the8

definition of the services that are supported by Fed-9

eral universal service support mechanisms shall con-10

sider the extent to which such services11

(A) are essential to education, public12

health, or public safety;13

(B) are being deployed in public tele-14

communications networks by communications15

service providers; and16

(C) are consistent with the public inter-17

est, convenience, and necessity.18

(2) ALTERATIONS AND MODIFICATIONS.The19

Joint Board shall consider whether to recommend to20

the Commission modifications in the definition of21

the services that are supported by Federal universal22

service support mechanisms not less than once every23

5 years.24



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(3) SPECIAL SERVICES.In addition to the1

services included in the definition of universal serv-2

ice under paragraph (1), the Commission may des-3

ignate additional services for such support mecha-4

nisms for schools, libraries, and health care pro-5

viders for the purposes of subsection (h).6

(4) HIGH-SPEED BROADBAND SERVICE.The7

definition of universal service shall not be construed8

to exclude eligible communications service providers9

from using universal service funding for the provi-10

sion, maintenance, and upgrading of high-speed11

broadband service..12

SEC. 102. UNIVERSAL SERVICE SUPPORT CONTRIBUTIONS.13

(a) IN GENERAL.Section 254(d) of the Commu-14

nications Act of 1934 (47 U.S.C. 254(d)) is amended to15

read as follows:16

(d) UNIVERSAL SERVICE SUPPORT CONTRIBU-17

TIONS.18

(1) C ALCULATING UNIVERSAL SERVICE SUP-19

PORT CONTRIBUTIONS.20

(A) IN GENERAL.To preserve and ad-21

vance universal service in accordance with the22

principles in subsection (b), the Commission23

shall assess contributions to universal service24

support mechanisms from communications serv-25



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ice providers in a manner that is equitable,1

competitively neutral, nondiscriminatory, and2

ensures that communications service providers3

are subject to similar obligations. The Commis-4

sion may employ any methodology to assess5

such contributions, including consideration of6

(i) revenues derived from the provi-7

sion of intrastate, interstate, and foreign8

communications services by communica-9

tions service providers;10

(ii) working telephone numbers used11

by communications service providers; or12

(iii) any other current or successor13

identifier protocols or connections to the14

network used by communications service15

providers.16

(B) USE OF MORE THAN ONE METHOD-17

OLOGY.If no one methodology designated18

under subparagraph (A) effectuates the prin-19

ciples described in this Act, the Commission20

may employ a combination of any such meth-21

odologies.22

(C) LOW VOLUME EXCEPTION.The23

Commission shall not materially increase the24

contributions of communications service pro-25



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viders whose customers typically make a low1

volume of calls on a monthly basis.2

(D) DE MINIMIS EXCEPTION.The Com-3

mission may exempt a communications service4

provider from the requirements of this sub-5

section if the communications activities of such6

provider are limited to such an extent that the7

level of contributions of such provider to the8

preservation and advancement of universal serv-9

ice would be de minimis.10

(E) GROUP PLAN EXCEPTION.If the11

Commission uses a methodology under subpara-12

graph (A) based in whole or in part on working13

telephone numbers, it may provide a discount14

for additional numbers provided under a group15

or family pricing plan for residential customers16

provided in one bill.17

(2) REPORTS.The Commission shall estab-18

lish annual reporting requirements for all commu-19

nications service providers contributing to universal20

service support mechanisms or receiving universal21

service support. The reporting requirements shall22

not impose unnecessary burdens and shall be neutral23

with respect to technology and provider. The Com-24

mission shall periodically review the reporting re-25



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quirements to ensure that universal service support1

is used for the provision, maintenance, and upgrad-2

ing of the facilities for which support is intended.3

(3) UNIVERSAL SERVICE SUPPORT CONTRIBU-4

TION LIMITS.5

(A) LIMITATION.The total amount of6

universal service support for all universal serv-7

ice support mechanisms other than support for8

schools, libraries, rural health care, life-line,9

link-up, and toll limitation shall not exceed the10

total amount that was collected from all sources11

for all universal service support mechanisms12

other than schools, libraries, rural health care,13

life-line, link-up, and toll limitation in the last14

year prior to the date of enactment of the Uni-15

versal Service Reform Act of 2009, as ad-16

justed17

(i) annually by the growth factor de-18

scribed in subparagraph (B); and19

(ii) once, within 1 year after the date20

of enactment of the Universal Service Re-21

form Act of 2009, by the amounts that the22

adjustments in subsections (e)(4) and (m)23

increase demand for universal service sup-24

port.25



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(B) GROWTH FACTOR.The growth fac-1

tor shall be the annual percentage change in2

the Gross Domestic ProductChained Price3

Index, or any successor general inflationary fac-4

tor that the Bureau of Economic Analysis of5

the Department of Commerce determines shall6

supersede such index, plus the annual percent-7

age change in the total number of incumbent8

local exchange carrier working loops in rural,9

insular, or high cost areas, if that percentage10

change is greater than zero..11

(b) STUDY.12

(1) IN GENERAL.Not later than 270 days13

after the date of enactment of this Act, the Federal14

Communications Commission shall complete a study,15

including a cost-benefit analysis, of using a system16

based on working telephone numbers or revenues for17

calculating contributions by communications service18

providers to universal service support mechanisms.19

(2) REPORT.The Federal Communications20

Commission shall transmit a report to the Com-21

mittee on Energy and Commerce of the House of22

Representatives and the Committee on Commerce,23

Science, and Transportation of the Senate on the24



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study conducted under paragraph (1) within 1 year1

after the date of enactment of this Act.2

SEC. 103. UNIVERSAL SERVICE SUPPORT DISTRIBUTION.3

Section 254(e) of the Communications Act of 19344

(47 U.S.C. 254(e)) is amended to read as follows:5

(e) DISTRIBUTION AND USE OF UNIVERSAL SERV-6

ICE SUPPORT.7

(1) IN GENERAL.Only a communications8

service provider designated as an eligible commu-9

nications service provider under section 214(e) shall10

be eligible to receive specific Federal universal serv-11

ice support. An eligible communications service pro-12

vider that receives such support shall use that sup-13

port only for the provision, maintenance, and up-14

grading of facilities and facilities-based services for15

which the support is intended. Any such support16

should be explicit and sufficient to achieve the pur-17

poses of this section.18

(2) USE OF UNIVERSAL SERVICE SUPPORT.19

The use of universal service support for all rural, in-20

sular, or high cost areas21

(A) should be expanded to include high-22

speed broadband service and any other service23

that is determined to be a universal service by24

the Commission under subsection (c); and25



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(B) should be available to eligible commu-1

nications service providers designated under2

section 214(e), but an eligible communications3

service provider that is also an incumbent local4

exchange carrier may elect to have the Commis-5

sion calculate the amount of universal service6

support payable to such provider in the same7

manner as support based on how average for-8

ward looking cost is calculated for eligible com-9

munications service providers in paragraph (3).10

(3) C ALCULATING SUPPORT FOR CARRIERS11

PROVIDING SERVICE IN RURAL, INSULAR, OR HIGH12

COST AREAS.13

(A) C ALCULATING SUPPORT.In calcu-14

lating the need for and distribution of Federal15

universal service support for eligible commu-16

nications service providers that serve high cost17

areas, but not insular areas, the Commission18

shall revise the Commissions current non-rural19

high cost model support mechanism for rural,20

insular, or high cost areas to provide support to21

each wire center to the extent the incumbent22

local exchange carriers average forward-looking23

cost per line for such wire center exceeds 2.7524

times the national average cost per line.25



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(B) HOLD HARMLESS.In implementing1

subparagraph (A), the Commission shall ensure2

that, for 1 year after the date of enactment of3

the Universal Service Reform Act of 2009, no4

incumbent local exchange carrier receives less5

Federal support for rural, insular, or high cost6

areas than the incumbent local exchange carrier7

would have received under the Commissions8

support mechanism for such areas as in effect9

on the day before the date of enactment of the10

Universal Service Reform Act of 2009. The11

Commission shall determine the difference be-12

tween the amount an incumbent local exchange13

carrier would have received under the Commis-14

sions support for rural, insular, or high cost15

areas as in effect on the day before the date of16

enactment of the Universal Service Reform Act17

of 2009 and the amount that such incumbent18

local exchange carrier would receive after such19

date of enactment and shall, beginning in the20

fifth quarter that begins after such date of en-21

actment, reduce the amount of such difference22

in equal increments over a 10-year period such23

that the amount of the difference has been re-24

duced to zero at the end of such period..25



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(C) demonstrate the ability to remain1

functional in emergency situations;2

(D) comply with applicable State and3

Federal consumer protection and service quality4

standards; and5

(E) meet the basic requirements for the6

deployment of high-speed broadband service7

and provide high-speed broadband service either8

itself or through resale of another providers9

services, including, for purposes of this sub-10

paragraph only, the resale of satellite11

broadband service, except that the Commission12

shall establish a process in which13

(i) a determination can be made to14

waive the requirements of this subpara-15

graph for 3 years upon a communications16

service providers application covering all17

or part of such communications service18

providers service area demonstrating that19

the deployment and provision of high-speed20

broadband service is not technically fea-21

sible or would materially impair the com-22

munications service providers ability to23

continue to provide local exchange service24

throughout its service area, except that a25



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of providing high-speed broadband service1

for all wire centers included in the national2

average calculation in section 254(e)(3)(A);3

and4

(iii) any application of a communica-5

tions service provider for a waiver pursu-6

ant to clause (i) on which the Commission7

has not taken final action within 60 days8

after the date of submission to the Com-9

mission shall be deemed granted.;10

(2) by amending paragraphs (2) through (4) to11

read as follows:12

(2) ELIGIBILITY CRITERIA.13

(A) IN GENERAL.In addition to the cri-14

teria specified in paragraph (1), the Commis-15

sion shall establish such additional eligibility16

criteria for the receipt of universal service sup-17

port by eligible communications service pro-18

viders as it deems necessary and in the public19

interest. The criteria established in paragraph20

(1) and the criteria established by the Commis-21

sion pursuant to this paragraph shall be used22

by State commissions in determining which pro-23

viders shall be designated as eligible recipients24



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(ii) as described in paragraph1

(1)(E), within 5 years after the date of en-2

actment of the Universal Service Reform3

Act of 2009.4

Failure of such an eligible communications service5

provider to maintain and meet the eligibility require-6

ments within the period required by clause (i) or (ii)7

after the date of enactment of the Universal Service8

Reform Act of 2009 shall require the automatic ter-9

mination of specific Federal universal service sup-10

port to that recipient. Such a recipient shall simulta-11

neously be relieved of its obligation under this sec-12

tion, except as described in subparagraph (B). A re-13

cipient of universal service support is permitted to14

maintain and meet the eligibility requirements in15

part of its service territory and is eligible to continue16

to receive specific Federal universal service support17

in those service areas within its service territory in18

which it meets the eligibility requirements. This19

paragraph shall not be construed to prohibit such a20

recipient from obtaining a waiver under paragraph21

(1)(E).22

(B) LIFE-LINE AND LINK -UP EXCEP-23

TION.A recipient of universal service support24

in any service area prior to the date of enact-25



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ment of the Universal Service Reform Act of1

2009 that relinquishes its eligible telecommuni-2

cations carrier or eligible communications serv-3

ice provider designation shall continue to offer4

and receive support for providing life-line and5

link-up service to its subscribers throughout its6

service area unless another provider is des-7

ignated as an eligible communications service8

provider or a life-line service provider in all or9

part of that service area.;10

(3) in paragraph (6)11

(A) in the heading, by striking COMMON12

CARRIERS and inserting COMMUNICATIONS13

SERVICE PROVIDERS;14

(B) by striking common carrier each15

place it appears and inserting communications16

service provider;17

(C) by striking eligible telecommuni-18

cations carrier each place it appears and in-19

serting eligible communications service pro-20

vider; and21

(D) by striking carrier and inserting22

provider; and23

(4) by adding at the end the following:24



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(7) AMOUNT OF SPECIFIC FEDERAL UNI-1

VERSAL SERVICE SUPPORT AVAILABLE TO MOBILE2

WIRELESS COMMUNICATIONS SERVICE PROVIDERS.3

(A) IN GENERAL.The Commission shall4

establish the amount of specific Federal uni-5

versal service support for rural, insular, or high6

cost areas to be distributed to all mobile wire-7

less communications service providers des-8

ignated as eligible communications service pro-9

viders under this subsection through a competi-10

tive bidding process established by the Commis-11

sion.12

(B) LIMITATION.The amount of such13

universal service support available to be distrib-14

uted annually to mobile wireless communica-15

tions service providers shall not exceed the16

amount of specific Federal universal service17

support received by all mobile wireless commu-18

nications service providers for rural, insular, or19

high cost areas in the last full calendar year im-20

mediately preceding the date of enactment of21

the Universal Service Reform Act of 2009, as22

adjusted annually by the growth factor de-23

scribed in section 254(d)(3)(B).24



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ticipants for the Commissions wireless spec-1

trum auctions.2

(C) The Commission shall seek competi-3

tive bids to provide mobile wireless communica-4

tions service in rural, insular, or high cost areas5

where there are at least 3 mobile wireless com-6

munications service providers qualified to bid.7

In rural, insular, or high cost areas where there8

are not at least 3 mobile wireless communica-9

tions service providers qualified to bid, the10

Commission shall continue to provide support11

at the per-line level in effect as of the day be-12

fore the date of enactment of the Universal13

Service Reform Act of 2009, subject to adjust-14

ment over time pursuant to the interim cap on15

support to competitive eligible telecommuni-16

cations carriers adopted by the Commission17

prior to such date of enactment.18

(D) Prior to soliciting competitive bids,19

the Commission shall issue a request for pro-20

posals identifying the area a winning bidder21

must serve and the minimum requirements for22

serving such area. In determining the appro-23

priate service area for competitive bidding, the24

Commission shall take into account existing25



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wireless service areas, including the areas where1

mobile wireless communications service pro-2

viders are licensed to provide service.3

(E) No more than 2 mobile wireless com-4

munications service providers shall be selected5

by the Commission to receive specific Federal6

universal service support in each service area7

based on the Commissions evaluation of the8

competitive bids received for each service area.9

In evaluating competitive bids received for each10

service area, the amount of the bid and the11

minimum broadband speeds proposed by each12

mobile wireless communications service provider13

shall be primary factors in selecting a winning14

bid, but the Commission may take into account15

other factors, including timing of service build-16

out.17

(F) When awarding bids to mobile wire-18

less communications service providers, the Com-19

mission shall prioritize funding as follows:20

(i) First, to service areas where no21

mobile wireless communications service22

providers offer voice service.23

(ii) Second, to service areas where no24

mobile wireless communications service25



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providers offer high-speed broadband serv-1

ice.2

(iii) Third, to all other service areas.3

(G) If the Commission selects a bid from4

a mobile wireless communications service pro-5

vider that has not been designated as an eligible6

communications service provider in that service7

area, the mobile wireless communications serv-8

ice provider shall apply for such designation9

within 1 month after the date the Commission10

selects its bid. The Commission or applicable11

State commission shall act on such application12

within 6 months after the date of its receipt.13

(H) Each mobile wireless communications14

service provider selected as a Federal universal15

service provider for a service area shall receive16

specific Federal universal service support based17

on each mobile wireless communications service18

providers respective bid, for a multi-year pe-19

riod, up to 10 years, as determined by the Com-20

mission to be appropriate, after which time the21

area shall be rebid.22

(I) If specific Federal universal service23

support is made available to a second mobile24

wireless communications service provider in a25



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rural, insular, or high cost area that is subject1

to competitive bidding, the amount of such sup-2

port shall be based on that mobile wireless com-3

munications service providers bid and shall be4

no more than the amount of specific Federal5

universal service support awarded by the Com-6

mission to the first mobile wireless communica-7

tions service provider in such area.8

(J) Each mobile wireless communications9

service provider that is selected to serve each10

service area shall execute a service contract11

with the Commission.12

(K) The Commission shall provide for a13

transition to competitive bidding from the cur-14

rent system of specific Federal universal service15

support for wireless providers that shall last no16

longer than 3 years after the date of enactment17

of the Universal Service Reform Act of 2009.18

As of the date the Commission implements19

competitive bidding, provider-specific Federal20

universal service adjustments to wireless sup-21

port imposed by the Commission in effect as of22

the date of enactment of the Universal Service23

Reform Act of 2009 shall also be superseded24

and void..25



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(b) DEFINITIONS.Paragraph (5) of section 214(e)1

is amended to read as follows:2

(5) SERVICE AREA DEFINED.As used in this3

subsection, the term service area means a geo-4

graphic area determined by the Commission for the5

purpose of determining universal service obligations6

and support mechanisms for eligible communications7

service providers. In the case of an area served by8

a rural telephone company, service area means9

such companys study area or the licensed or au-10

thorized service area of any other communications11

service provider serving an area that overlaps with12

the service area of a rural telephone company..13

SEC. 105. REMOVAL OF IMPEDIMENTS TO SUFFICIENT SUP-14

PORT MECHANISMS.15


U.S.C. 254) is further amended by adding at the end the17

following new subsection:18

(m) REMOVAL OF LIMITATIONS ON UNIVERSAL19

SUPPORT MECHANISMS.The limitations on universal20

service support contained in section 54.305 of the Com-21

missions regulations (47 CFR 54.305) and the individual22

caps imposed upon carriers contained in section 36.63123

of the Commissions regulations (47 CFR 36.631) shall24



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cease to be effective on the date of enactment of the Uni-1

versal Service Reform Act of 2009..2

SEC. 106. SCOPE OF SUPPORT.3


U.S.C. 254) is further amended by adding after subsection5

(m), as added by section 105 of this Act, the following6

new subsection:7

(n) SCOPE OF SUPPORT.The Commission in im-8

plementing the requirements of this section (as amended9

by the Universal Service Reform Act of 2009) with respect10

to the distribution and use of Federal universal service11

support shall not limit such distribution and use to a sin-12

gle connection or primary line, and all residential and13

business lines served by an eligible communications service14

provider shall be eligible for Federal universal service sup-15

port..16

SEC. 107. APPLICATION OF ANTIDEFICIENCY ACT; INVEST-17

MENT OF CONTRIBUTIONS.18


U.S.C. 254) is further amended by adding after subsection20

(n), as added by section 106 of this Act, the following new21

subsections:22

(o) PROPER ACCOUNTING OF UNIVERSAL SERVICE23

CONTRIBUTIONS.24



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(1) FROM ALL BUDGETS.Notwithstanding1

any other provision of law, the receipts and disburse-2

ments of universal service contributions under this3

section shall not be counted as new budget author-4

ity, outlays, receipts, deficit, or surplus for purposes5

of6

(A) the budget of the United States Gov-7

ernment as submitted by the President;8

(B) the Congressional budget;9

(C) the Balanced Budget and Emergency10

Deficit Control Act of 1985; or11

(D) any other law requiring budget se-12

questers.13

(2) ADDITIONAL EXEMPTIONS.Section 1341,14

subchapter II of chapter 15, and sections 3302,15

3321, 3322, and 3325 of title 31, United States16

Code, shall not apply to17

(A) the collection and receipt of universal18

service contributions, including the interest19

earned on such contributions; or20

(B) disbursements or other obligations21

authorized by the Commission under this sec-22

tion.23

(p) INVESTMENT OF UNIVERSAL SERVICE SUPPORT24

CONTRIBUTIONS.Notwithstanding any other provision25



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[Discussion Draft]

(C) any other current or successor identi-1

fier protocols or connections to the network2

used by communications service providers.3

(2) DISREGARD OF INTERSTATE COMPO-4

NENT.With respect to a combination of services5

which includes interstate services, the Commission6

shall determine how States may calculate the pro-7

portion of intrastate services for which they are per-8

mitted to make an assessment.9

(3) GUIDELINES.Regulations adopted by a10

State under this subsection shall result in a specific,11

predictable, and sufficient mechanism to support12

universal service and shall be competitively and tech-13

nologically neutral, equitable, and nondiscrim-14

inatory..15

TITLE IIACCOUNTABILITY16

SEC. 201. PERFORMANCE MEASURES.17

Within 1 year after the date of enactment of this Act,18

the Federal Communications Commission shall establish19

and implement outcome-oriented performance goals and20

measures for each universal service support program.21

SEC. 202. AUDITS.22

The Federal Communications Commission shall,23

within 270 days after the date of enactment of this Act,24

establish rules to25



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[Discussion Draft]

(1) determine the appropriate audit method-1

ology for audits of recipients of Federal universal2

service support;3

(2) ensure that universal service support audi-4

tors are trained in universal service support program5

compliance and audit only in connection with such6

compliance;7

(3) provide that auditors may not penalize re-8

cipients of universal service support by requesting9

and auditing for program compliance records, in-10

cluding copies of invoices for equipment purchased11

or maintained with program disbursements, that are12

older than records that recipients of universal service13

support are required to retain pursuant to the Fed-14

eral Communications Commissions rules; and15

(4) provide that any appeal of a finding by the16

Universal Service Administrative Company or any17

successor organization in connection with a program18

audit is resolved by the Federal Communications19

Commission within 180 days after the date of filing.20

SEC. 203. REPORT TO CONGRESS.21

The Federal Communications Commission shall, not22

later than 3 years after the date of enactment of this Act23

and triennially thereafter, report to Congress regarding24

the availability of the services designated by the Commis-25



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[Discussion Draft]

sion as universal services, including the availability of such1

services to schools, libraries, rural health care providers,2

and low income consumers. Such report shall include the3

outcome-oriented performance goals and measures for4

each universal service support program, an analysis of the5

implementation of such goals and measures, and an anal-6

ysis of the progress towards meeting such goals and meas-7

ures.8

TITLE IIIINTERCARRIER9

COMPENSATION REFORM10

SEC. 301. INTERCARRIER COMPENSATION REFORM.11

(a) AUTHORITY.12

(1) IN GENERAL.Notwithstanding any other13

provision of law, the Federal Communications Com-14

mission shall have authority to reform intercarrier15

compensation systems for both interstate and intra-16

state traffic.17

(2) DEADLINE.The Federal Communications18

Commission shall complete an initial intercarrier19

compensation reform proceeding within 1 year after20

the date of enactment of this Act.21

(3) PRIVATE ARRANGEMENTS.Entities that22

are required to participate in intercarrier compensa-23

tion shall be permitted to enter into arrangements24

by mutual agreement for the exchange of traffic25



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[Discussion Draft]

without regard to the rules established by the Fed-1

eral Communications Commission pursuant to this2

subsection.3

(b) INTERCARRIER COMPENSATION RECOVERY4

MECHANISM.If, at any time after the date of enactment5

of this Act, the Federal Communications Commission6

mandates that intercarrier compensation revenues be re-7

covered through an alternative revenue recovery mecha-8

nism, such alternative revenue recovery mechanism shall9

be included in the limitation set forth in section10

254(d)(3)(A) of the Communications Act of 1934 (4711

U.S.C. 254(d)(3)(A)), and the Commission shall adjust12

such limitation by the amount that such alternated rev-13

enue recovery mechanism increases demand for universal14

service support.15

SEC. 302. NETWORK TRAFFIC IDENTIFICATION ACCOUNT-16

ABILITY STANDARDS.17

Part II of title II of the Communications Act of 193418

is amended by adding at the end the following:19

SEC. 262. NETWORK TRAFFIC IDENTIFICATION ACCOUNT-20

ABILITY STANDARDS.21

(a) NETWORK TRAFFIC IDENTIFICATION STAND-22

ARDS.A communications service provider shall ensure,23

to the degree technically possible and in accordance with24

industry standards, that all traffic that originates on its25



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[Discussion Draft]

which a free or below cost service or product is provided1

by an entity with which the local exchange carrier has a2

business, financial, or contractual arrangement relating3

directly or indirectly to switched access revenues from the4

offering of such service or product.5

(b) PROHIBITION.The assessment of an access6

stimulation charge constitutes an unreasonable practice7

under section 201(b) of the Communications Act of 19348

(47 U.S.C. 201(b)), and local exchange carriers are pro-9

hibited from assessing access stimulation charges.10

(c) NO PRESUMPTION OF VALIDITY.Nothing in11

this Act shall be construed as indicating that access stimu-12

lation charges assessed prior to the effective date of this13

Act were just, reasonable, or in accordance with the Com-14

munications Act of 1934 or any other statute, regulation,15

tariff, or policy.16

TITLE IVRURAL HEALTH CARE17

SUPPORT MECHANISMS18

SEC. 401. RURAL HEALTH CARE SUPPORT MECHANISMS.19

(a) AMENDMENT.Subparagraph (A) of section20

254(h)(1) of the Communications Act of 1934 (47 U.S.C.21

254(h)(1)(A)) is amended to read as follows:22

(A) HEALTH CARE SERVICES FOR RURAL23

AREAS.Within 180 days after the date of en-24

actment of the Universal Service Reform Act of25



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[Discussion Draft]

2009, the Commission shall prescribe regula-1

tions that provide that a communications serv-2

ice provider shall, upon receiving a bona fide re-3

quest, provide covered services which are nec-4

essary for the provision of health care services5

in a State, including instruction relating to6

such services, to any public or not-for-profit7

health care provider that serves persons who re-8

side in rural areas in that State at rates that9

are reasonably comparable to rates charged for10

similar services in urban areas in that State. A11

communications service provider providing serv-12

ice under this subparagraph shall be entitled to13

have an amount equal to the difference, if any,14

between the rates for services provided to health15

care providers for rural areas in a State and16

the rates for similar services in urban areas in17

that State treated as a service obligation as a18

part of its obligation to participate in the mech-19

anisms to preserve and advance universal serv-20

ice..21

(b) DEFINITION OF HEALTH CARE PROVIDER.22

Subparagraph (B) of section 254(h)(7) of such Act (4723

U.S.C. 254(h)(7)(B)) is amended to read as follows:24



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(B) HEALTH CARE PROVIDER.The term1

health care provider means2

(i) post-secondary educational insti-3

tutions offering health care instruction,4

teaching hospitals, and medical schools;5

(ii) community health centers or6

health centers providing health care to mi-7

grants;8

(iii) local health departments or9

agencies;10

(iv) community mental health cen-11

ters;12

(v) not-for-profit hospitals;13

(vi) critical access hospitals;14

(vii) rural hospitals with emergency15

rooms;16

(viii) rural health clinics;17

(ix) not-for-profit nursing homes or18

skilled nursing homes;19

(x) hospice providers;20

(xi) emergency medical services fa-21

cilities;22

(xii) rural dialysis facilities;23

(xiii) elementary, secondary, and24

post-secondary school health clinics; and25



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(xiv) consortia of health care pro-1

viders consisting of one or more entities2

described in clauses (i) through (xiii)..3

(c) DEFINITION OF RURAL FOR HEALTH CARE SUP-4

PORT.Section 254(h)(7) of such Act (47 U.S.C.5

254(h)(7)) is further amended by adding at the end the6

following new subparagraph:7

(J) RURAL AREA.Within 180 days after8

the date of enactment of the Universal Service9

Reform Act of 2009, the Commission shall pre-10

scribe regulations that provide that, for pur-11

poses of the rural health care universal service12

support mechanisms established pursuant to13

this subsection, a rural area is14

(i) any incorporated or unincor-15

porated place in the United States, its ter-16

ritories and insular possessions (including17

any area within the Federated States of18

Micronesia, the Republic of the Marshall19

Islands and the Republic of Palau) that20

has no more than 20,000 inhabitants21

based on the most recent available popu-22

lation statistics from the Census Bureau;23

(ii) any area located outside of the24

boundaries of any incorporated or unincor-25



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porated city, village, or borough having a1

population exceeding 20,000;2

(iii) any area with a population den-3

sity of fewer than 250 persons per square4

mile; or5

(iv) any place that qualified as a6

rural area and received support from the7

rural health care support mechanism pur-8

suant to the Commissions rules in effect9

prior to December 1, 2004, and that con-10

tinues to qualify as a rural area pursuant11

to such rules..12

(d) SCHOOLS, LIBRARIES, RURAL HEALTH CARE,13

LIFE-LINE, LINK-UP, AND TOLL LIMITATION HOLD14

HARMLESS.Except as provided in subsections (h)(1)(A),15

(h)(7)(B), and (h)(7)(J) of section 254 of the Communica-16

tions Act of 1934 (47 U.S.C. 254), as amended by this17

section18

(1) nothing in this Act (and the amendments19

made by this Act) shall be construed as limiting,20

changing, modifying, or altering the amount or21

means of distribution of universal service support for22

the schools, libraries, rural health care, life-line,23

link-up, and toll limitation programs; and24



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Documents

Universal Service Reform Act of 2009 Discussion Draft of 11-06-09